For decades, contractors and small business owners have been stuck with a $600 threshold for issuing 1099-NEC forms, a number that hasn’t budged since 1954.

That’s finally changing.

Starting in 2026, the IRS will raise the filing threshold to $2,000 for payments to independent contractors (and yes, that includes your subs).

Then, beginning in 2027, it’ll be indexed for inflation in $100 increments.

Although that makes things easier (less 1099-NECs to issue and track), this doesn’t mean you can stop keeping good records.

If the IRS audits and finds you’ve misclassified a worker, penalties can still double what you’d owe.

Also, remember — if you pay your subcontractors via PayPal, Venmo, credit card, or debit card, you don’t issue a 1099-NEC at all.

Those are reported by the payment processor on a 1099-K instead.

Also remember to get a W-9 prior to work beginning, or risk never being able to obtain one!

If you’re interested in learning further, book a time and let’s chat: accountingsolutionsllp.com/appointment

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.